Howell v. Western Railroad Company

• Court: U.S. Supreme Court
• Writing for the Court: MILLER
• Citation: Howell v. Western Railroad Company, 94 U.S. 463, 24 L.Ed. 254 (1876)
• Decision Date: 01 October 1876
• Parties: HOWELL v. WESTERN RAILROAD COMPANY

94 U.S. 463

24 L.Ed. 254

HOWELL v. WESTERN RAILROAD COMPANY.

October Term, 1876

APPEAL from the Circuit Court of the United States for the Eastern District of North Carolina.

Mr. A. S. Merrimon for the appellant.

Mr. W. N. H. Smith, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

The appellant in this suit is the owner of five bonds of $1,000 each, issued by the defendant corporation, and he seeks the foreclosure of a mortgage on the railroad and its appurtenances given to secure their payment. These are part of an issue of like bonds to the amount of $900,000, made at the same time, to wit, Oct. 31, 1870, payable thirty years after date, with coupons for interest attached, at the rate of eight per cent er annum.

Very few of these bonds were ever sold or put into circulation. All that have been, except these held by plaintiff, have either been taken up or are under the control of the company. The face of each bond contained a provision, that, on the failure to pay any coupon when presented at the place of payment, and continued default thereon for six months, the whole sum mentioned in said bond became due and payable, and the mortgage deed contained a provision that a like failure as to any one coupon of any single bond should make all the bonds become due and payable.

On the back of each bond was printed the act of the legislature of North Carolina, which authorized the corporation to make these mortgage bonds, which declares that 'said president and directors are hereby authorized and empowered to issue the mortgage bonds of said company in sums of not less than $100 each, and not exceeding in amount $900,000, and to be negotiated at not less than par, and not to mature at an earlier period than thirty years,' &c.

Many issues are raised by the pleadings, which are not necessary to be considered here. We shall confine ourselves to two questions, which are all that we deem appropriate to our purpose. The first of these is, whether the plaintiff is a bona fide holder for value of the bonds on which he sues. There is some reason to infer that Rogers, who was one of the trustees of the mortgage, and the banker who was expected to negotiate the bonds, and with whom they were deposited, was not a rightful holder of them, though it is asserted that they were paid to him for services to be performed as trustee in the mortgage. He, however, never performed any services, no bonds were ever negotiated, and the arrangement by which he held these bonds as his own does not appear to have been authorized or approved by the board of directors of the company.

This, however, is immaterial; for, from the testimony before us, we are compelled to hold that Howell, the complainant, was a bona fide purchaser of them for value of Rogers, without notice of any defect in his title. The only evidence on this subject found in the record is his own deposition, in which he states unequivocally that, on a settlement made by him with Bayne & Co., who were his bankers, he took these bonds in absolute payment of money due him, at the rate of seventy-five cents on the dollar, and had no...